Hyundai Mobis Pursues 'Profit and Return Simultaneously'... Maximizing Shareholder Value

TSR-Based Shareholder Value Policy Announcement
3 to 4 Trillion Invested in External and Facility Investments
Dividend Payout Ratio Proposed at 20-30%

[Asia Economy Reporter Hyunseok Yoo] Hyundai Mobis is enhancing shareholder value based on Total Shareholder Return (TSR), which simultaneously pursues stock price gains and shareholder returns. Additionally, the company plans to invest up to KRW 8 trillion over three years in future mobility sectors, including semiconductors and software (SW). The strategy aims to increase corporate value, creating a virtuous cycle that leads to long-term stock price appreciation and shareholder returns.

On the 22nd, Hyundai Mobis announced its “2022 Shareholder Value Enhancement Policy” based on TSR, which pursues both stock price gains and shareholder returns. TSR is a global advanced corporate evaluation method that comprehensively reflects changes in stock value, dividends, and shareholder returns such as treasury stock disposal. It objectively calculates shareholders’ returns and is regarded as a representative shareholder-friendly policy. Only a very small number of listed companies in Korea utilize TSR. Hyundai Mobis is the first within the Hyundai Motor Group to adopt it proactively.

This year’s dividends will be flexibly managed at a payout ratio level of 20-30%. The payout ratio is an indicator showing how much of net profit is distributed to shareholders as dividends. The currently implemented interim dividend will also be maintained. Treasury stock will be repurchased this year at a scale of KRW 330 billion, of which KRW 62.5 billion will be canceled.

A key feature of Hyundai Mobis’s shareholder value enhancement policy this year is the additional reinforcement of investment stability and predictability for shareholders. This is also a continuation of the mid- to long-term shareholder return policy pursued over the past three years.

Since 2019, the company has faithfully executed shareholder returns totaling KRW 2.6 trillion. Dividends amounted to KRW 1.1 trillion, and quarterly dividends were introduced for the first time. Treasury stock repurchases totaled about KRW 1 trillion. Of this, 2 million shares of treasury stock already held and newly purchased shares worth KRW 187.5 billion (734,000 shares) were additionally canceled.

Alongside this, Hyundai Mobis disclosed cash usage plans necessary for investments responding to future mobility over the next three years, as well as mid- to long-term business model innovations such as urban air mobility (UAM) and robotics. The plans include △KRW 3-4 trillion for external investments in semiconductors, SW, and autonomous driving △KRW 3-4 trillion for facility investments to ensure stable parts supply for electrification and core components △minimum cash reserves necessary for corporate operations, including responses to global supply chain crises.

This shareholder value enhancement policy is also attracting attention from an ESG (Environmental, Social, and Governance) management perspective. From the shareholders’ standpoint, it plans to elevate corporate value one step further and improve the objectivity and transparency of governance. To this end, a new board composition plan was proposed to modernize the management system. The Outside Director Candidate Recommendation Committee recommended Professor Kim Hwajin of Seoul National University Law School, an expert in governance, as an outside director candidate.

Professor Kim is a leading authority in corporate governance, company law, and capital markets law in Korea. He serves as a voting rights expert committee member of the Korea Corporate Governance Service (KCGS). With his addition, Hyundai Mobis’s board will consist of five outside directors emphasizing diversity, expertise, and independence. Current outside directors include Professor Kim Daesu of Korea University Business School (logistics and risk), CEO Jang Youngwoo of Young & Co. (shareholder-nominated outside director, finance and accounting), Professor Kang Jina of Seoul National University College of Engineering (management and strategy), and Director Karl Thomas Neumann (industry and technology). Professor Kim’s joining is expected to further strengthen ESG management policies.

This content was produced with the assistance of AI translation services.